YouSaid · the spoken record

Brian Hurst

lines on the record: 77
first: 2025-01-10
most recent: 2025-01-10
sittings or episodes: 1
sources: podcast

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“That's really the approach. In fact, a lot of successful single manager businesses evolve to the multi-strategy approach because they recognize that lack of consistency for a single approach, a single investing style was a threat to their own business. And so expanding into other strategies and styles is how a lot of these more successful single strategy funds evolved.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, technically, they will put the money to work in the sense of it's not pure cash sitting there, but really there's a lot of borrowing power. You have a lot of assets that you're holding. There's a tremendous amount of borrowing power you can borrow against those assets that you hold to then create a more efficient portfolio. And that's where kind of multi strategy funds evolved. So, multi strategy funds gave you the benefit of many different strategies and styles. Plus the consistency.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Typical hedge fund, it varies, but depending on the type of style and strategy, we'll have between 40 and 90 percent of the money you give them just sitting in cash.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Before it rebounds and does well in the next year. So that model, while it still exists today, is tough from an investment to stick with. Then you switch to fund of funds. Institutional investors, you know, one-stop shop, buy into a fund of funds and get exposure to many different strategies and styles in one vehicle. That's what came out of that and was to address this inconsistency. So fund of funds were more consistent than a single strategy fund I would say the consequence and its issue really is both for funded funds and really for portfolios of hedge funds that investors have, it's cash inefficient, it's capital inefficient because most hedge funds have a lot of cash on their balance sheet.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, long shirt discretionary equity stock picking hedge funds. That model survived for a little while, but as investors were investing in these individual kind of single strategy, single-style hedge funds, what they realized is that any one single approach is not very consistent. It's going to go through its good periods and its bad periods. And was hard to hang on to what I would call or be exposed to what the line item risk is. When you have these quarterly reviews of what's going on in the portfolio, invariably the discussion is let's talk about the things that are down the most. And that leads to firing managers when they're down, usually just after an environment that was just bad for their approach.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Lot of Wall Street was let go. So, a lot of talent was being let go. And much of that talent was investment analysts, research analysts that covered stocks, new stocks, deeply, knew the management of those companies deeply. So if you're an investment analyst at a Wall Street bank, you go off and hang up a shingle, start a single strategy hedge fund where you're picking stocks. You had an argument why you'd have an edge because you knew these managers and these stocks deeply. And that's really was like a Cambrian explosion of hedge funds at that moment in time. And even to this day, I think in terms of like sheer number count, the vast majority of hedge funds are really stock picking hedge funds, long short.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Starting back, this is around 2000, let's say. Obviously, hedge funds existed before that, but that's really the point at which at least a meaningful amount of institutional investors actually started having investments in hedge funds as like a normal course of business. That was the year, obviously, that the market sold off a lot. There was the Enron fiasco and whatnot.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“This is a white paper I wrote from my clear off a CIO CEO hat. And it really talks about the history of the hedge fund industry, why different models of delivering alpha, starting with, let's say, single strategy hedge funds, fund of funds, multi-strategy funds, and now multi strategy multi-manager, multi-PM funds. And that's the latest evolution. And then we talk about what we think might be the next step, part of which we think we will drive. So that's the point of the paper. And there's reasons why you went from different models from one to the next. And it has to do with a variety of things. I encourage you to read the paper. It's on our website.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“I think one thing that makes AQRI very powerful is its ability to attract top talent, specifically on the academic side. Smart people want to hang out with other smart people. There is definitely a network effect that happens there. And I would say part of the compensation you're getting indirectly by being in an organization like that is getting exposure to all these great minds that you can learn from. You can bounce ideas off of. Is it a think tank? Yeah, I think it is a think tank from that perspective. But at the end of the day, it's a business and they're there to make money, make money for their investors. So I think there is a lot of focus on that as well. So the publications, you see a lot of white papers. And sure, I would say it rhymes with a lot of things they do, but they obviously keep a lot of the special sauce unpublished and use that within their funds.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's part of what makes him fantastic as an individual, but also fantastic to work with and work for. It made the place fun, even in the tough times. And so that's a big reason why I think a lot of people stuck through lots of the ups and downs that any organization has.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“It was fun. I think Cliff's created a lot of different things, but one was he hired well. He was able to attract really talented people. And then he just let them do what they do. So he's a micromanager. He just lets them run with it. And so that was a very fortunate thing for me, right place, right time, in terms of being able to get a lot of responsibility early on. And that's how I was able to not just be a researcher, building models and creating new strategies that I'd run by Cliff and he would say, okay, you're doing this dumb or doing that dumb and you got to improve this. But also doing all the trading by myself for the firm for the first several years. And then eventually saying, hey, Cliff, I need some help here. We need to hire someone to run technology other than me. We need to, you know, hire more traders than just me so that I can actually sleep. So that's how he ran it. And it was a lot of fun. I mean, you mentioned it earlier on. I mean, Cliff's hilarious.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“A couple things I'll say about that. So, one thing just from a personal perspective, my wife and I, we have five children together. And that's a lot to deal with. My wife is amazing, and there's no way I would be able to do all the stuff I do at work if it weren't for her being amazing and handling everything at home. So that's the first thing in terms of how I get so many things done at work. I'm also from a personality perspective, I get bored very quickly. I like learning and doing a lot of different things. I like being able to jump around. So to me, that's just fun. The consequence is sleep. I don't sleep very much.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Cliff eventually persuaded them to let us get the new machines, but one of the big changes as you talk about leaving a place, you have lots of resources and whatnot at large organizations, but you have limited resources at every place, no matter how big you are. There's always trade-offs that you're making. When you start as a new firm, one thing that was a big change is that at Goldman, we had to support lots of other groups. We were providing research advice, investment advice, talk to clients, help them raise money in other products. When we launched our own hedge fund, all that mattered was making money in that hedge fund. So helping that focus was important. And we were able to buy the latest computers at half the cost.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“And get twice the performance. What I didn't realize at the time is that when you're trying to run an organization that large and complex.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll tell you a funny story. So I got into a few different battles with the administration folks at Goldman Sachs Management. If you remember, like in college, I had a computer business where we'd like buy parts, build computers, and sell them. And so I knew how to build my own computers. Goldman Sachs at the time, the standard computer that everybody had was what was called an 8086. This was like the first. Real PC that IBM had out there, and they were good, but they weren't the most advanced available machines. Basically, I went to the administration. I said, look, we need the most advanced machines because we're trying to run a lot of computationally intensive models. And this machine we have now is very slow. It's taking very long to run our models. You can buy the latest machine at half the price of what Goldman was paying.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“We started that as a fund really in 1995. It had been trading prop for a little time with Goldman's money. And we made money almost every month, basically. It traded as a fund, and you think we left in terms of a timing perspective. This started in 1995. We left early 1998. So it's only a couple years and change that we were trading this within GSAM before leaving to start up AQR.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. So that you'd have many different signals, and we're trading many different asset classes. And so it's like you're saying all those signals you would give different weights, different signals, and those would add up to you like these things, you don't like these things. We would trade global equities in a bunch of different countries, but market neutral, so long as much as you are short. So you're not taking a bet on, is the market going to go up or down, you're really taking a bet on this group of stocks that's going to outperform this other group of stocks by looking at a bunch of different characteristics. We did that for stocks. We did that for currencies, for commodities, you name it. It was tradable and we had data we wanted to be trading it. And that's really what the genesis of that fund was.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a multi strategy approach, but it was all quantitative. And when I say quantitative, that means a lot of things to different people. I think about every good investment process is really a process and whether people would label it as quantitative or not is really how automated it is. And so by quantitative, I mean, like really automated downloading public data for the most part, pumping it through some systems, and that causes you to want to buy and sell different instruments around the world.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“And so quickly we realized we've got to start generating some revenue if we want to stay alive. And Cliff went to them and said, hey, we've built some interesting models. We think we're good at picking stocks and futures and things like that. We think we can trade on this and make some money. He convinced the partnership to give us some money. So it's basically a prop trading effort for a little while. That funded very well, which really opened the door for us to be able to leave and start up and raise money as an independent hedge fund.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“A little bit, but yeah, it was really a bad year for fixed income, and the firm had a lot of risk in fixed income, I presume, which led to the tough year. So we were a research group, cost center. And then left and right, people were disappearing week by week as they were, you know, cutting down.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“It was great. We started off just a little background there as a research group within GSAM. So think Cost Center and just putting some timeframes around this. This is 1994. Which is one of the toughest years in Goldman's history, even going back to the Great Depression. It was kind of a year where Trumina partner, you had to put in money, which was that.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“So I was his first tyrant. He was building out that new team. What my other colleagues did back then, you had basically three choices coming out of Warden. It was accounting, investment banking, and consulting. There was really no jobs for asset management, but those are the courses I love the most at Penn and really wanted to pursue that. So it was a great opportunity.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Like everything in life that works out well, that's a lot of hard work, but mostly luck because of the DLJ experience that was a good thing to have on my resume. Cliff Asnes, founder of AQR Capital, managing partner there, at the time, I think it was late 20s. He was finishing up his PhD at the University of Chicago and was working for Goldman Sachs Asset Management. He got the mandate to launch a new quantitative research group, and so he wanted to hire someone who had both the finance background and the computer science background. I had started with a couple of friends, a software business in high school, and at Penn, one of the things I did with my roommate was we started up a hardware business, kind of like Michael Dell, building and selling computers to faculty and students on campus. So I had the computer science background. Cliff had gone undergrad at Penn at Wharton also. So he knew that we'd taken the same kind of courses. We spoke the same language from that perspective and had that technical.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“I was like, wow, this is amazing. I was like, this could save me hours and hours of work. And so I went to the MD at the time and I said, hey, I think I can automate most of what the analysts are doing. He said, you're a summer intern. We're not paying you much. Go at it. And that's what I did. So I started off in that. But I mainly learned that I didn't really want to do investment banking because it didn't hit on my course skill set, which was like engineering back down, quantitative techniques and tools.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“I was like, I've got time. I'll talk to you. And he showed me, first of all, two things. He showed me this thing called Microsoft Excel at the time everybody was using Lotus 123. And he showed me basically how you can type in a ticker and that pulls in all of the financial information right into this spreadsheet for you before the internet. But what was kind of the internet at the time.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I did DLJ was interesting. That was my summer year between junior and senior at Warden. And they kept me on throughout my senior year to finish up an interesting project, which is basically automating the job of the investment analyst that we're doing all the company work, getting all the 10Ks, 10Qs, all the information. At the time, there was a new company starting up, and I know I'm on Bloomberg, but it was called Faxet at the time. Sure, of course. And there was a salesperson walking around trying to get anyone to talk to them, because this was a brand new company. And I was a summer analyst.”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a great question. I think when I went to school, I didn't even know quantitative finance was a thing. And frankly, at that point in time, it really wasn't much of a thing. I was taken by my dad. He was an accountant and CFO of a commercial real estate company. He would take me to the office and I was really fascinated by business. I really wanted to get into that. I was into computers. I really learned how to teach myself how to program and things like that. But I wanted to get into business and I said, dad, I want to get into real estate. And my dad gave me some really good advice. He said, Brian, if you think about finance as an org chart, real estate is like one of the divisions. And if you start in real estate, it's hard to move up and go to other divisions and try other things out. You should really learn corporate finance and you can always switch to real estate if you wanted to. And corporate finance is kind of the top of the umbrella or the org chart. And I said, okay, well, what's corporate finance? And where do I go to learn that? And he's like, well, you should go to Warden. And then I said, well, what's Warden?”
2025-01-10 · Masters in Business · From AQR Quant to Founder & CIO with Brian Hurst · IDENTIFIED FROM THE TRANSCRIPT · source